The Irish Limited Partnership
The right Tax Planning Solution
Ireland is a jurisdiction characterised by a standard level of taxation. However, Irish legislation provides an excellent opportunity for the registration and operation of companies with a zero tax rate namely, the Limited Partnerships (LPs).
An Irish Limited Partnership (LP) with foreign members, if it does not engage in any business within Ireland and does not derive income from Irish territory, is not subject to taxation in Ireland. Under Irish tax laws, an LP is not treated as a distinct taxable entity. Instead, the founders are responsible for paying taxes based on the profits earned by the LP, and this taxation is carried out in accordance with the tax regulations of their respective places of residence. To illustrate, consider an Irish LP with a General Partner residing in an offshore location, such as the Seychelles, which exclusively generates income outside of Ireland. In this scenario, the LP is exempt from Irish taxes, and any applicable taxes are paid by the members in their respective countries of residence, in accordance with the local legislation.
Despite the favorable tax regime enjoyed by LP companies, it’s important to note that these companies are still obliged to prepare financial statements. Additionally, the relevant Partnership Tax return must be filed annually with the Irish Tax Revenue.
Irish Partnership Act
For foreign investors contemplating the establishment of companies in Ireland, there is a diverse range of business structures to choose from, including partnerships. In the Irish legal framework, several types of partnerships are recognized:
Investment limited partnerships
The Partnership Act of 1980 governs general partnerships in Ireland, offering foreign investors a variety of benefits, including tax advantages and reduced disclosure requirements. If you require guidance on setting up a general partnership, our Irish company formation experts are available to provide their services.
Establishing a General Partnership in Ireland
According to Irish legislation, a general partnership can be established by a minimum of two individuals or corporate entities. Generally, the maximum number of partners in an Irish general partnership is limited to 20, although there are exceptions in specific cases that allow for more partners. The creation of an Irish general partnership is defined by a partnership agreement, which can be concluded either orally or in writing, with written agreements being the most common choice.
Irish general partnerships can be categorized as either informal partnerships formed for an indefinite period or formal partnerships with limited durations. These partnerships may operate under one of the partner’s surnames or adopt a distinct business name, which must be registered with the Irish Trade Register. It’s crucial to note that partners in an Irish general partnership carry unlimited liability, as this business entity does not possess a separate legal identity apart from its owners. For those interested in establishing such a partnership, our Ireland company formation specialists can offer their guidance.
Taxation of General Irish Partnerships
From a taxation perspective, the Irish general partnership offers significant advantages. While the partnership must register for tax purposes with the Revenue Commissioners, each partner is issued a distinct tax registration code, and they are taxed individually based on their income.
For comprehensive information on the benefits of forming a general partnership in Ireland, feel free to reach out to our Irish company formation specialists. Additionally, our experts can provide tailored accounting services to suit your needs.
Irish Limited Partnerships
A limited partnership must comprise at least one general partner and one limited partner. Typically, the partnership should not exceed 20 members, except in cases involving banking activities, where the limit is set at 10 members.
The general partner holds unlimited liability, whereas the limited partner enjoys limited liability, which is restricted to the capital contributed to the firm. The role of the limited partner is akin to that of a shareholder in a limited company, as their liability is confined to their contributed capital, and they do not play a role in the management of the firm or possess the authority to bind the partnership. The partnership is managed by the general partners, who bear full responsibility for the partnership’s debts and obligations.
Notable Tax Planning Benefits for Irish Limited Partnerships
No residency requirement for partners.
Corporate entities are eligible to act as partners.
Minimal contribution by each partner, potentially as low as 1 euro.
No obligation for the contributions to be paid up.
The partnership is exempt from corporate tax in Ireland if its partners are not Irish residents, and if the partnership’s activities are conducted outside the jurisdiction.
From a tax perspective, Irish general partnerships present a highly advantageous company structure. Although the partnership must register for tax purposes with the Revenue Commissioners, each partner is issued a unique tax registration code, and they are individually taxed on their income.
For comprehensive insights into the advantages of establishing a general partnership in Ireland, please don’t hesitate to contact our Irish company formation experts. You can also rely on our specialists to provide customized accounting services tailored to your specific requirements.
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